We use cookies to make your experience of our website better. Some of these are set by third party Google Analytics to help us analyse website traffic. To comply with privacy regulations, we require your consent to set these cookies. If you continue to use the site without selecting an option we will assume you are happy for us to use cookies.

Can You Keep A (Trade) Secret?

Can You Keep A (Trade) Secret?

Whether it’s a surprise birthday present, an unexpected trip away or a broken vase in the living room, we all have secrets and we know how to keep them (however hard it may be!).  However, can the same be said for trade secrets?  From rumours of the KFC recipe being transported in armoured high-security cars, to the IRN-BRU recipe custodians never travelling on the same plane, it’s clear that trade secrets are no ordinary secrets.  Businesses around the world are prepared to go to extreme lengths to ensure theirs remain protected.

But short of these necessarily extreme measures, what do businesses have to do to protect their trade secrets and what information can actually be protected?  The EU Trade Secrets Directive, which is set to come into effect later this year, provides some much needed clarity on this lesser-known intellectual property right.

Why new law, and when?

At present, there is a lack of consistency in how trade secrets are defined and protected across Europe.  The new Directive aims to address this issue by introducing a harmonised, minimum standard of protection which will apply to trade secrets across Europe.

The Directive must be implemented into Member States’ national law by 9 June 2018.  Whilst Brexit may affect the extent to which the Directive becomes part of UK law, the UK Government will still be required to implement the Directive whilst we remain in the EU.

With this requirement in mind, earlier this week the UK IPO announced that it was launching a consultation on the Directive and the proposed UK Trade Secrets (Enforcement, etc) Regulations 2018, which are intended to transpose the Directive into UK law.  The UK IPO has now issued a consultation paper which seeks the views of interested parties on the proposed UK Regulations.

The consultation paper recognises that the UK already has a well-developed system of legal protection for trade secrets and that a number of the provisions of the Directive have already been implemented in the UK by common law or statute.  However, the Regulations do propose a number of changes designed to address any discrepancies between the position in the UK and the provisions of the Directive.  The proposed changes include provisions relating to limitation and prescription periods for raising proceedings and the measures which may be imposed on an infringer.

The consultation will run until 16 March 2018, following which the UK IPO will consider the Regulations further based on the responses received.

What is changing?

The Directive introduces a number of key changes.  Perhaps most importantly, Article 2(1) of the Directive defines what information will be categorised as a trade secret and therefore falling within the scope of protection.  The information must meet all of the following requirements:

  1. It is a secret in the sense that it is not generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;
  2. It has commercial value because it is secret; and
  3. It has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

Another key change introduced by the Directive is the inclusion of a number of statutory remedies which can be obtained from the courts in the event of unlawful acts.  These include:

  1. An injunction (interdict in Scotland) order preventing the infringing use or disclosure of the trade secret;
  2. Corrective measures including recall and/or destruction of products containing or embodying the trade secret; and
  3. Damages for loss of earnings incurred by the trade secret holder or profits made by the infringer.

What will be required from businesses?

The Directive introduces a new focus on the steps which must be taken by businesses to ensure that the confidential information in question remains a trade secret, with Article 2(1)(c) specifying that the trade secret holder must take “reasonable steps” to keep it secret.

In anticipation of the Directive coming into effect, businesses should therefore be turning their minds to what policies and safeguards they require to put in place to ensure that the requirements of Article 2(1)(c) are met.  Whilst “reasonable steps” are not defined in the Directive, such steps are likely to include:

  1. Identifying what information is confidential and falling within the scope of the Directive;
  2. Safeguarding and restricting access to information constituting a trade secret;
  3. Reviewing existing confidentiality procedures and policies; and
  4. Implementing effective written policies and maintaining staff awareness of their significance.

Regardless of the remedies available to trade secret holders under the Directive, prevention is always better than the cure.  We regularly advise businesses on the steps which can be taken to protect their trade secrets and other intellectual property rights and mitigate the risks of these being compromised.  If this is something which you think your business could benefit from, please do not hesitate to get in touch on the contact details noted below.

Colin Hulme
Head of Dispute Resolution

Burness admin